US household debt soars – Federal Reserve – RT Business News
The total jumped by $351 billion in the third quarter, mainly due to mortgages and the use of credit cards, the regulator reports
U.S. household debt jumped in the third quarter at its fastest pace in 15 years due to rising credit card use and mortgage balances, a Federal Reserve report revealed this week. .
According to the Fed, total debt hit a record $16.5 trillion, up 2.2% from the previous quarter and 8.3% from a year ago. Households added $351 billion in debt for the July-September period, the regulator said.
The increase follows a jump of $310 billion in the second quarter and represents an annual increase of $1.27 trillion. Debt has surged over the past year due to soaring inflation, rising interest rates and strong consumer demand.
The central bank noted that the main contributors to indebtedness came from mortgage balances, which soared $1 trillion from a year ago to $11.7 trillion, and corporate debt. credit cards, which soared to $930 billion.
Credit card balances have collectively increased by more than 15% from the same period in 2021, the biggest annual jump in more than 20 years. The increase “overlooks the last eighteen years of data”, according to Fed researchers.
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“Credit card, mortgage and auto loan balances continued to increase in the third quarter of 2022, reflecting a combination of robust consumer demand and higher prices,” said Donghoon Lee, economic research adviser at the New York Fed. “However, new mortgage lending has slowed to pre-pandemic levels amid rising interest rates.”
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